UNIT 3

MANAGEMENT INFORMATION SYSTEM (MIS) IN ORGANIZATION

LECTURE FOUR: MEANING, COMPONENTS AND OBJECTIVES OF MIS

Historical Perspective of Management Information System in Organization

The importance of management information systems to improve decision making has long been
understood by farm management economists. Financial and production records have long been
used by these economists as an instrument to measure and evaluate the success of a farm
business. However, when computer technology became more widely available in the late 1950s
and early 1960s, there was an increased enthusiasm for information systems to enhance
management decision processes. At an IBM hosted conference, Ackerman, a respected farm
management economist, stated that: “The advances that have taken place in calculating
equipment and methods make it possible to determine the relationship between ultimate yields,
time of harvest and climatic conditions during the growing season. Relationship between the
perspective and actual yields and changing prices can be established. With such information at
hand the farmer should be in a position to make a decision on his prediction with a high degree
of certainty at mid-season regarding his yield and income at harvest time.” This statement, made
in 1963, reflects the optimism that prevailed with respect to information systems.

Definitions of MIS

Management: Management is art of getting things done through and with the people in formally
organized groups. The basic functions performed by a manager in an organization are: Planning,
controlling, staffing, organizing, and directing.
Information: Information is considered as valuable component of an organization. Information
is data that is processed and is presented in a form which assists decision maker.
System: A system is defined as a set of elements which are joined together to achieve a common
objective. The elements are interrelated and interdependent. Thus every system is said to be
composed of subsystems. A system has one or multiple inputs, these inputs are processed
through a transformation process to convert these input(s) to output.
The Management Information System (MIS) is a planned system of collecting, storing and
disseminating data in the form of information needed to carry out the functions of management.”
The MIS is defined as a system which provides information support for decision making in the
organization.
The MIS is defined as an integrated system of man and machine for providing the information to
support the operations, the management and the decision making function in the organization.
The MIS is defined as a system based on the database of the organization evolved for the
purpose of providing information to the people in the organization.
The MIS is defined as a Computer based Information System.

Objectives of MIS
The goals of an MIS are to implement the organizational structure and dynamics of the enterprise
for the purpose of managing the organization in a better way and capturing the potential of the
information system for competitive advantage.

Following are the basic objectives of an MIS −

1. Capturing Data − Capturing contextual data, or operational information that will

contribute in decision making from various internal and external sources of organization.
MIS capture data from various internal and external sources of organization. Data
capturing may be manual or through computer terminals.
2. Processing Data − The captured data is processed into information needed for planning,
organizing, coordinating, directing and controlling functionalities at strategic, tactical and
operational level. Processing data means −
a. making calculations with the data
b. sorting data
c. classifying data and
d. summarizing data
3. Information Storage − MIS stores the processed or unprocessed data for future use. If
any information is not immediately required, it is saved as an organization record, for
later use.
 4. Information Retrieval − The system should be able to retrieve this information from the
storage as and when required by various users.
5. Information Propagation − Information or the finished product of the MIS should be
circulated to its users periodically using the organizational network.

Components of MIS
Management information system (MIS) provides information that organizations require to
manage themselves efficiently and effectively. Management information systems are typically
computer systems used for managing the organizations. The five primary components of MIS
are:
1) Hardware
2) Software
3) Data (information for decision making),
4) Procedures (design, development and documentation), and
5) People (individuals, groups, or organizations).
LECTURE FIVE: CHARACTERISTICS, ADVANTAGES AND DISADVANTAGES OF MIS

Characteristics of MIS:
1. Systems Approach: The information system follows a systems approach. Systems approach
means taking a comprehensive view or a complete look at the interlocking sub-systems that
operate within an organization.
2. Management Oriented: Management oriented characteristic of MIS implies that the
management actively directs the system development efforts. For planning of MIS, top-down
approach should be followed. Top down approach suggests that the system development starts
from the determination of management’s needs and overall business objective. To ensure that the
implementation of systems polices meet the specification of the system, continued review and
participation of the manager is necessary.

3. Need Based: MIS design should be as per the information needs of managers at different
levels.

4. Exception Based: MIS should be developed on the exception based also, which means that in
an abnormal situation, there should be immediate reporting about the exceptional situation to the
decision makers at the required level.
5. Future Oriented: MIS should not merely provide past of historical information; rather it
should provide information, on the basis of future projections on the actions to be initiated.
6. Integrated: Integration is significant because of its ability to produce more meaningful
information. Integration means taking a comprehensive view or looking at the complete picture
of the interlocking subsystems that operate within the company.
7. Common Data Flow: Common data flow includes avoiding duplication, combining similar
functions and simplifying operations wherever possible. The development of common data flow
is an economically sound and logical concept, but it must be viewed from a practical angle.
8. Long Term Planning: MIS is developed over relatively long periods. A heavy element of
planning should be involved.
9. Sub System Concept: The MIS should be viewed as a single entity, but it must be broken
down into digestible sub-systems which are more meaningful.
10. Central database: In the MIS there should be common data base for whole system
Advantages of MIS

The following are some of the benefits that can be attained using MIS:

 Companies are able to identify their strengths and weaknesses due to the presence of
revenue reports, employees' performance record etc. Identifying these aspects can help a
company improve its business processes and operations.
 Giving an overall picture of the company.
 Acting as a communication and planning tool.
 The availability of customer data and feedback can help the company to align its business
processes according to the needs of its customers. The effective management of customer
data can help the company to perform direct marketing and promotion activities.
 MIS can help a company gain a competitive advantage.
 MIS reports can help with decision-making as well as reduce downtime for actionable
items.

Disadvantages

Unemployment: While information technology may have streamlined the business process ithas
also crated job redundancies, downsizing and outsourcing. This means that a lot of lower and
middle level jobs have been done away with causing more people to become unemployed.

Privacy: Though information technology may have made communication quicker, easier and
more convenient, it has also bought along privacy issues. From cell phone signal interceptions to
email hacking, people are now worried about their once private information becoming public knowledge.
Lack of job security: Industry experts believe that the internet has made job security a big issue
as since technology keeps on changing with each day. This means that one has to be in a constant
learning mode, if he or she wishes for their job to be secure.
Dominant culture: While information technology may have made the world a global village, it
has also contributed to one culture dominating another weaker one. For example it is now argued
that US influences how most young teenagers all over the world now act, dress and behave.
Languages too have become overshadowed, with English becoming the primary mode of
communication for business and everything else.
Ineffective: Management information systems have the potential to become ineffective in a
company’s operations. As with all computer systems, the management information system is only
as good as the programmer. Gathering unimportant or non-essential information can delay business decisions
because managers must request additional input. Spending too much time reprogramming or
correcting issues can also increase the time spent in the decision-making process. Business
owners and managers may also need extensive training on new systems, creating a learning curve that
will hopefully diminish over time.

Expensive: Installing a management information system can be expensive for a company.

Information technology while cheaper today than previous years—can represent a significant
expense, especially for larger organizations. These systems may also require ongoing support or
upgrade fees, which can represent future fixed cash outflows. Companies must create a budget to
pay for these items to ensure the information system stays current with business technology.
Attempting to integrate these systems with technology currently in use can also increase
expenses.

Maintenance: Companies may need to hire maintenance individuals to help keep an electronic
information system running smoothly. These individuals often need experience in computer
science functions and other business topics. Not only does this increase labor costs, but it also
requires additional training and ongoing education for these individuals. Business technology can
change frequently, creating an environment where companies must have trained individuals who
can properly maintain computers, websites, servers and other equipment in use by the
management information system.
 UNIT 4

INFORMATION SYSTEM BASED ON DECISION CRITERION

LECTURE SIX: DIFFERENT INFORMATION SYSTEM BASED ON DECISION

CRITERION

An information system is defined as the software that helps organize and analyze data. So, the
purpose of an information system is to turn raw data into useful information that can be used for
decision making in an organization. The following are the information systems such as

EXECUTIVE INFORMATION SYSTEM (EIS)

An executive information system (EIS), also known as an Executive support system (ESS) is
a type of management support system that facilitates and supports senior executive information
and decision-making needs. It provides easy access to internal and external information relevant
to organizational goals. It is commonly considered a specialized form of decision support system
(DSS). EIS emphasizes graphical displays and easy-to-use user interfaces. They offer strong
reporting and drill-down capabilities. In general, EIS are enterprise-wide DSS that help top-level
executives analyze, compare, and highlight trends in important variables so that they can monitor
performance and identify opportunities and problems. EIS and data warehousing technologies
are converging in the marketplace.

Component of EIS

EIS components can typically be classified as:

 Hardware
 Software
 User interface
 Telecommunications

Advantages of EIS
 i. Easy for upper-level executives to use, extensive computer experience is not required in
operations
ii. Provides strong drill-down capabilities to better analyze the given information.
iii. Information that is provided is better understood
iv. EIS provides timely delivery of information. Management can make decisions promptly.
v. Improves tracking information
vi. Offers efficiency to decision makers

Disadvantages of EIS

i. System dependent
ii. Limited functionality, by design
iii. Information overload for some managers
iv. Benefits hard to quantify
v. High implementation costs
vi. System may become slow, large, and hard to manage
vii. Need good internal processes for data management
viii. May lead to less reliable and less secure data
ix. Excessive cost for small company

OFFICE AUTOMATION SYSTEMS (OAS)

Office automation refers to the application of computes and communication technology to office
functions. Office automation systems are meant to improve the productivity of managers at
various levels of management of providing secretarial assistance and better communication
facilities.
Office activities may be grouped under two classes, namely
i) Activities performed by clerical personnel (clerks, secretaries, typist, etc.,) and
ii) Activities performed by the executives (managers, engineers or other professionals like
economist, researches etc.)
In the first category, the following is a list of activities.
a) Typing
b) Mailing
c) Scheduling of meetings and conferences,
d) Calendar keeping, and
e) Retrieving documents
The following is a list of activities in the second category (managerial category)
a) Conferencing.
B) Production of information (messages, memos, reports, etc.) and controlling performance.

Advantages are:

i. Office automation can get many tasks accomplished faster.

ii. It eliminates the need for a large staff.
iii. Less storage is required to store data.
iv. Multiple people can update data simultaneously in the event of changes in schedule

Disadvantages

i. Office automation systems are quite expensive when you first begin to invest in the office
automation software as well as equipment.
ii. A professional office suite or machine which can do so many things such as scanning,
binding documents and duplicating them has to cost you some money. Employers who
have worked for years might not use this function.
iii. They are aware of the old and manual methods which are difficult to adjust. This may
also need some training that is time consuming. In any case, if the automation system
doesn’t function all that well, power will be interrupted.

DECISION SUPPORT SYSTEM (DSS)

A decision support system (DSS) is an information system application that assists decision-
making. DSS tends to be used in planning, analyzing alternatives, and trial and error search for
solution. The elements of the decision support system include a database, model base &
software. The main application areas of DSS are Production, finance and marketing.
DSS can be differentiated from MIS on the basis of processing the information. MIS processes
data to convert it into information. DSS processes information to support the decision making
process of a manager.

Components of DSS

Three fundamental components of a DSS architecture are:

1. the database (or knowledge base),

2. the model (i.e., the decision context and user criteria)
3. The user interface.

Advantages of Decision Support System

(1) Time savings

(2) Enhance effectiveness.
(3) Improve interpersonal communication.
(4) Competitive advantage.
(5) Cost reduction

(6) Increase decision maker satisfaction.

(7) Promote learning.
(8) Increase organizational control.

Disadvantages of DSS

i. Information Overload: A computerized decision making system may sometimes result

in information overload. Since it analyzes all aspects of a problem, it leaves a user in a
dilemma what to consider and what not to consider. Not each bite of information is
necessary in decision making. But when it’s present, a decision maker finds it difficult to
ignore information that is not a priority.
ii. Too much Dependence on DSS: It is true that decision support systems are integrated
into businesses to make everyday decisions faster and more easily. Some decision makers
develop a tendency to depend too much on computerized decision making and don’t want
 to apply their own brains. Clearly, there is a shift in focus and decision makers may not
hone their skills further because of excessive dependence on DSS.
iii. Devaluation of Subjectivity: A decision support system promotes rational decision
making by suggesting alternatives basis the objectivity. While bounded rationality or
restricted irrationality plays a critical role in decision making, subjectivity cannot and
should not be rejected. A DSS promotes objectivity and relegates subjectivity, which can
have serious impact on a business.
iv. Overemphasis on Decision Making: Clearly the focus of computerized decision making
is on considering all aspects of a problem all the time, which may not be required in
many of the situations. It is essentially important to train the users to ensure effective and
optimal use of DSS.
v. Cost of Development: The cost of decision making decreases once a decision support
system is installed. But development and implementation of a DSS requires a huge
monetary investment. Customization may attract higher cost. If you’re on a tight budget,
you might not get a customized DSS specific to your needs.

TRANSACTION PROCESS SYSTEM (TPS)

A transaction process system (TPS) is an information processing system for business transactions
involving the collection, modification and retrieval of all transaction data. Characteristics of a
TPS include performance, reliability and consistency. TPS is also known as transaction
processing or real-time processing.

Features

 Rapid response: fast performance with rapid results.

 Reliability: well-designed backup and recovery with a low failure rate.
 Inflexibility; treat every transaction equally.
 Controlled processing; maintain specific requirement for the roles and responsibilities of
different employees.

Types of TPS
There are two types of TPS such as Batch processing and Real time processing
 i. Batch processing system: Batch processing is where the information is collected as a
batch and then processed later on. Eg ; paying by Cheque
ii. Real Time Processing : Real time processing is where all details of the transaction are
recorded and changed at the time as it occurs Eg;ATM’s

Advantages

• Batch or real-time processing available

• Reduction in processing time, lead time and order cycle time

• Reduction in inventory, personnel and ordering costs

• Increase in productivity and customer satisfaction

Disadvantages

• High setup costs

• Lack of standard formats

• Hardware and software incompatibility